But their plans to absorb the long-distance industry through the acquisitions of AT&T Corp. and MCI Inc. have begun to attract rumblings of doubt, even among policy-makers.
Ivan Seidenberg, CEO of Verizon Communications Inc., and Ed Whitacre, CEO of SBC Communications Inc., told panels in both the Senate and the House of Representatives that their anticipated consolidation of the telecom industry will not adversely affect competition, maintaining that the Bells do not compete head-to-head very often with AT&T and MCI.
Members of the House bought the argument, with most members on the Committee on Energy and Commerce greeting it last week with hearty praise. (The most notable exception was Rep. Ed Markey, D-Mass.) Senators, on the other hand, appear to want to take a closer look.
"These deals have received ... an unusually friendly reception and one that Im not sure is wholly deserved," Sen. Mike DeWine, R-Ohio, said Tuesday.
"In fact, one might normally expect that mergers worth $23 billion, combining four of the countrys leading phone companies, would raise great concern among those who follow the industry."
While it may be the case that local and long-distance carriers do not often fight for the same customer in the high-end enterprise market and in the low-end residential market, it is not necessarily so in the vast SMB (small and midsized business) market in between.
Companies with only a local or regional presence often have their choice of at least three major providers—the long-distance carriers and the regional Bell in that territory.
If the acquisitions are approved by regulators, which probably would take at least a year, there is no guarantee that the newly fortified Verizon and SBC will compete with each other.
Midsized businesses could see their choices reduced from three providers to one—and their negotiating leverage eliminated altogether. The nearly decade-long experience of competition spawned by the Telecommunications Act of 1996 demonstrates that the RBOCs (regional Bell operating companies) are not eager to battle in each others territories.